“Few people attain great lives, in large part because it’s just so easy to settle for a good life.” – Jim Collins, “Good to Great”

On the first page in the first chapter of “Good to Great,” Jim Collins makes the intriguing statement above.  While his book focuses on how some companies manage to break from their pack of competitors to achieve remarkable and sustained success, apparently Collins sensed that the lessons are applicable on a personal level as well.  I couldn’t agree more.

In fact, the more I thought about Collins’ research findings, the more application I saw for anyone who wants to attain greatness with his or her personal finances.

Something bigger than you

Lots of business leaders revel in the prestige and perks of the corner office.  I once worked for a company that had a past CEO who was over the top in his love of power.  During a leadership retreat, he walked out on the balcony of his hotel room, looked up, and was dismayed to see one of his direct reports standing on a balcony higher than his.  The CEO demanded to be moved to a higher floor.

By contrast, Collins’ first finding is that all companies that made the leap from good to great did so with what he calls a “Level 5 Leader” at the helm.

Level 5 Leaders exhibit a rare mix of extreme personal humility and intense professional will. Whereas the leaders at comparison companies put themselves first, Level 5 Leaders “channel their ego needs away from themselves and into the larger goal of building a great company.”

Is that how you’re running your household, even if your household is just you?  Are you using money mostly for your own pleasure or is it about something bigger than you?

As University of Pennsylvania psychologist Martin Seligman, author of “Authentic Happiness,” writes, “A meaningful life is one that joins with something larger than we are,” and “the larger the entity to which you can attach yourself, the more meaning in your life.”

Level 5 Money Managers arrange their financial beliefs and behaviors around goals that are bigger than themselves, such as their faith, their family, and their contribution to the world.

I know a guy who came home with a new motorcycle one day.  No discussion with his wife.  No thought as to whether they’re saving enough for their kids’ education.

By contrast, I’ve written before about a friend who married into $50,000 of non-mortgage debt.  Every time his wife mentioned “my debt,” he corrected her: “It’s our debt.”  Now that’s Level 5 Leadership.

The window and the mirror

Another fascinating finding about Level 5 Leaders has to do with giving credit and taking responsibility.

At comparison companies, when something went wrong, Collins found that the leaders blamed other people or circumstances beyond their control.  When something went right, it was all because of them.

Level 5 Leaders took the opposite approach.  When something went wrong, they took responsibility.  When something went right, they credited their team, the economy, and even luck.

Collins calls this “the window and the mirror.”  Comparison company leaders looked out the window when something went wrong and looked in the mirror when something went right.  Level 5 Leaders looked out the window when something went right and looked in the mirror when something went wrong.

Think about your finances.  Are you struggling under the weight of too much debt?  How did that happen?  To be sure, many people I’ve met in workshops have been through some horrendous circumstances such as divorce, unemployment, or medical issues.  But some of the people who faced the same circumstances also accepted responsibility for not saving enough or not using a budget to guide their spending.  Those are the people most likely to get and stay out of debt.

Level 5 Money Managers own their financial challenges and are quick to share the credit for their financial successes.

Taking the long view

One last characteristic of Level 5 leaders is that they are in it for the long run, wanting “to see the company even more successful in the next generation, comfortable with the idea that most people won’t even know that the roots of that success trace back to their efforts.”

If you’re married, what are you doing to ensure that your spouse will be just fine financially if something happened to you?  Does he or she know the passwords to your household’s online accounts?  Have you involved him or her in investment decisions?  Do you have enough insurance?

If you have kids, what are you doing to set them up for greater success than you have achieved?  Are you teaching them about hard work and delayed gratification?  Are you making a point of teaching and modeling generosity?  When they’re on their own, will they be able to navigate life successfully?

Level 5 Money Managers are all about the long-term success of their families.

Can Level 5 Leadership be learned?

Collins believes there are some people who probably could never become Level 5 Leaders.  They’re the ones who are mostly interested in what they can get from other people and from life.

But he suspects that a larger group of people could become Level 5 Leaders.  For some, it might take a catalytic event – an illness, for example – to prompt the sort of introspection that often leads to more other-centered behaviors.  Another route is putting into practice the key behaviors of all “Good to Great” companies.  Change your behavior and it’ll change the way you think.  Change the way you think and the new behaviors will become more natural.

In the weeks ahead, we’ll look at some of those behaviors and how they relate to personal finance.

For more ideas on how to use money well, be sure to subscribe to this blog and join us on Facebook and Twitter.

Matt Bell

By Matt Bell

Matt Bell is Sound Mind Investing’s Associate Editor. He is the author of three personal finance books published by NavPress, leads workshops at churches and universities throughout the country, and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.


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  • Michelle

    Hi Matt. I wonder if your friend who married into $50,000 debt ever thought, “Gee I wish we’d have waited 2 years and paid down the debt. We wouldn’t have started off with quite so much pressure.” Marriage is hard enough without that kind of stress. What do you think?

    • Matt Bell

      It’s a great question, Michelle, and I’ve counseled some couples in the past to delay getting married because of debt issues, although it’s usually that the person with debt hasn’t made any changes showing that he or she is really serious about dealing with the debt. For this couple, since he wasn’t holding the debt against her, she had changed a lot about how she managed money, and they could plow through the debt faster as a couple than she could have on her own, it made sense to both of them to go ahead with the wedding. They’re a really remarkable couple. In fact, I wrote an update to their story recently, which can be read here: http://www.soundmindinvesting.com/visitor/2012/july/level1.htm

  • Lisa V.

    Thanks Matt. I appreciate this message. I really like the viewpoint of taking the long view, seeing things as an investment for the long run. That changes my perspective with finances, but I can see I apply that towards my marriage as well.

    • Matt Bell

      Thanks for your note, Lisa. And I agree about these principles applying to marriage and really any area of life that matters to us – parenting, health, career. Collins does a great job of talking about the long view with his flywheel principle, which I’ll write about soon.

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